Why The World’s Largest Tech Companies All Want A Piece Of The Israeli Pie

They all want a piece of the Israeli pie: Microsoft, Google, Apple – dozens of large, multinational companies have chosen to establish offices and R&D centers in the Startup Nation. Why did they all pick Israel and what exactly are they doing here?

It’s a little known fact that two thirds of all R&D employees in Israel are employed by foreign companies such as HP and Microsoft, according Israel’s Central Bureau of Statistics. Currently, there are 250 R&D centers of foreign high-tech companies in Israel, according to IVC Research Center. The heavy presence of multinationals in Silicon Wadi clearly affects the local economy; consider this: Intel Israel is responsible for almost a tenth of Israel’s overall exports!

Some of the most active companies locally include international technology giants such as Intel and IBM, which set up shop in Israel in the early 70’s and have grown exponentially to employ thousands of local employees. Some of these companies’ latest technologies are being developed in Israel, for example: several components of IBM’s highly praised Watson (its artificially intelligent computer), or Intel’s super-fast Core 6 processors.

Thanks to multinational R&D centers, Israel is now a patent powerhouse. Over the past year, the number of Israeli patents filed in the US jumped 21 percent, making it the third-largest patent filer per capita, according to a study by Israeli business data firm BdiCoface. Only Japan and Taiwan outranked Israel. According to BdiCoface, between 2009 and 2013, IBM produced the most patents in Israel (674), followed by Intel (435), Marvell (281), SanDisk (261) and HP (197).

So, why are the big kids playing in the small Israeli playground? NoCamels rounded up the largest Israeli R&D centers of international high-tech companies to reveal the importance of their local presence to their overall success.

Intel

With roughly 10,000 employees in six locations across Israel, Intel is the largest multinational high-tech company in the Holy Land. It has four development centers in Haifa, Yakum, Petach Tikva and Jerusalem, as well as manufacturing facilities in Kiryat Gat and Jerusalem. Recent statistics show that in 2014, Intel exports accounted for 9 percent of total goods exported from Israel.

Intel picked Israel for its first R&D center outside the US approximately 40 years ago. Since the chipmaker set up shop in Israel, it has developed a series of breakthrough computer processors and has evolved beyond hardware.

“We’re so much more than a chipmaker today,” Guy Bar-Ner, director of sales and marketing for Intel Israel, tells NoCamels. Indeed, earlier this month Bar-Ner presented some of Intel’s most cutting-edge technologies at the DLD Tel Aviv Conference, including Internet of Things solutions for airports. The company recently opened an IoT lab in Israel, which also serves as an incubator for startups in this field.

Intel’s processor

Maxine Fassberg, president of Intel Israel, said during a DLD panel discussion that Intel is in Israel “because we’re after the talent and the creativity of the Startup Nation.” According to Fassberg, “Israel is crucial to Intel. Intel cannot do without the geniuses here in Israel.”

IBM

Roughly 1,000 employees work at IBM’s R&D labs in five centers across Israel. The computer giant launched a startup accelerator program in Israel last year, and has acquired more than a dozen Israeli companies for a total of $2 billion over the 40 years since it set up shop here.

IBM Israel employees work on a large number of projects involving big-data analytics, software, cognitive computing, application security and more.

There’s no doubt IBM is invested in Israel, or as IBM Israel’s passionate CEO Rick Kaplan said at the DLD conference: “We’ve acquired 13 companies here, we invest in them, we grow them.” He explained that IBM puts its offices “where the talent is,” and added that Israel is the company’s No. 2 office in terms of patents.

IBM Israel

IBM Israel is working on cyber-security as well. “Israel has set a target to create a cyber-center for the world. It’s our goal, too. Our lab will grow only if Israelis bring tremendous value, like they do with IBM Watson.”

What’s so special about Israel in his opinion? “The state is now reaching out to eighth graders. By the time they enlist in the military service at age 18, they have advanced degrees in math. It’s an amazing proposition,” Kaplan said.

Google

Google made waves locally when it acquired Israeli mobile navigation app Waze for $1.3 billion in 2013. The internet giant currently employs more than 500 people in Israel, in two R&D centers established in 2012 – Tel Aviv and Haifa. Google’s engineers generally work on products for Google’s global markets, including the company’s search engine, apps and social products, as well as on core Google infrastructure.

“Israel has become one of the fastest growing centers in all of Google, now reaching the order of some 500 or so engineers alone, and one of the biggest areas we specialize in is search,” Yossi Matias, who heads Google Israel and serves as Google’s VP of Search, recently told NoCamels.

Naturally, Google’s local sales team works with advertisers locally, but it also manages operations in Middle Eastern, African and European markets.

Microsoft

Microsoft’s Israeli R&D center is one of three strategic global development centers and home to some of the company’s most innovative technologies. The center’s 1,000 employees work on big data, business intelligence, cloud storage and artificial intelligence. Microsoft also operates a local startup accelerator-venture capital combo called Microsoft Ventures.

Over the past years, the software behemoth has acquired several Israeli companies, including security startup Aorato and software companies Equivio and N-trig. Earlier this month, Microsoft finalized its acquisition of Israeli cloud-security startup Adallom for $250 million.

Following the acquisition of Adallom, it is possible that Microsoft will eventually open a cyber-security research center in Israel, according to reports in the Israeli media.

Microsoft Israel

Facebook

The renowned social network – which purchased several Israeli startups in recent years – is one of the latest international giants to set up shop in Israel. The newcomer’s presence in Israeli is rather small, with about 40 employees, mostly in marketing.

However, its presence in Israel is important to the company’s leadership, according to Adi Soffer Teeni, CEO of Facebook Israel.

“Facebook looks at Israel as the place to be,” she said at the DLD conference. “There’s so much they can learn from Israelis. Israelis move fast, they don’t wait for an answer, that’s how you get things done. That’s why Facebook likes Israel. They’re amazed every time they come here.”

Apple

Apple is the latest company to open offices in Israel. Earlier this year, the consumer electronics giant inaugurated its R&D center in Israel, which employs about 800 people, including employees of Israeli startups Apple has acquired over the years, such as Anobit and PrimeSense.

According to reports in the media, Apple also wants its Israeli team to develop computer chips in-house, instead of relying on third-party suppliers.

In addition to taking part in developing Apple’s computers, mobile devices and online services, some employees take part in regional marketing and sales efforts.

Apple CEO Tim Cook during his visit to the company’s new R&D center in Israel

From HP and Marvell to Amazon, numerous companies want a piece of the action

Clearly, multinational companies look for local talent, creative thinking and perhaps a grain of Israeli chutzpa. In return, they get a team of Israelis eager to prove themselves. Or, as Israeli Yoelle Maarek, who leads Yahoo’s regional office, said earlier this month at DLD: “We want to be critical to the company; we want to be the leaders.”

News

5,000 Expected At OurCrowd Jerusalem Summit

| December 8, 2016 | OurCrowd, a leading equity crowdfunding platform, will host their 2017 OurCrowd Global Investor Summit on Feb. 16, 2017, in Jerusalem. The company claims it is the world’s largest equity crowdfunding event and the biggest investor event in Israel. Registrations have already doubled from this time last year, with up to 5,000 people from the global tech investment community expected to attend and more than 100 startups making news are slated to participate. Attendees will span some 60 countries, and will include investors, venture and corporate partners, entrepreneurs, 30 global delegations, industry leaders and members of the press. The 2017 OurCrowd Global Investor Summit theme, “The Future Is Here,” will showcase how 2016’s highlighted cutting-edge technologies are being implemented in businesses now and remaking entire industries.

Video Optimization Co. Beamr Raises $4M

| December 7, 2016 | Israeli video optimization startup Beamr imaging Ltd. has raised $4 million from Verizon Ventures, the company reports. Previous investors in the Tel Aviv-based video and image encoding and processing company with commercially deployed content adaptive optimization technology include Eric Schmidt’s fund Innovation Endeavors, Marker LLC, and Disruptive. Beamr raised $15 million in March and $9.5 million in a financing round in 2014. Beamr was founded in 2009 by CEO Sharon Carmel.

Laparoscopy Co. Gordian Surgical Raises $2.25M

| December 7, 2016 | Israeli laparoscopy company Gordian Surgical has closed a $2.25 million financing round. German medical device company, B. Braun Melsungen AG led the investment round with €1 million, with the remainder from current shareholders and three VC funds, two of which are Chinese funds. Gordian Surgical was founded in 2012 by CEO Zvi Pe’er and is a Trendlines Group Medical portfolio company based at the Misgav Business Center in the Western Galilee. Gordian also announced it has received US Food and Drug Administration (FDA) regulatory clearance for its TroClose1200, an innovative trocar with integrated closure system for the suturing of abdominal wall incisions during laparoscopic surgical procedures. The FDA approval follows Gordian’s receipt of CE Mark certification in September.

Cyber Security Co. SECDO Raises $10M

| December 6, 2016 | Israeli cyber security startup SECDO has closed a Series A financing round, bringing total investment to $10 million. The investment was led by RDC, a subsidiary of Elron Electronic Industries Ltd. and Rafael Advanced Defense Systems Ltd., Check Point Software Technologies Ltd., cofounder and chairman Marius Nacht, and the founders of Anobit, acquired by Apple. Founded in 2014 by CEO Shai Morag and CTO Gil Barak, both graduates of the IDF 8200 intelligence unit, SECDO has developed a platform to provide Next-Generation Incident Response solutions on cyber attacks. The funding will be used to expand US sales operations, customer support, and its R&D center.

P2P Insurance Co. Lemonade Raises $34M

| December 6, 2016 | Israeli P2P insurance company Lemonade has announced a $34 million Series B financing round. The funding was led by General Catalyst with participation from GV (formerly Google Ventures), Thrive Capital and Tusk Ventures, as well as existing investors Aleph, Sequoia, and XL Innovate. This brings Lemonade’s total funding to date to $60 million. Lemonade’s P2P insurance platform is powered by artificial intelligence and behavioral economics. The investment comes less than two months after the Israeli insurtech company launched in New York, and less than a year after announcing its seed round. Lemonade was founded by veteran Israeli tech entrepreneurs CEO Daniel Schreiber former president of Powermat and president and CTO Shai Winniger, a co-founder of Fiverr.com.

Shoulder Implant Co. OrthoSpace Raises $7M

| December 6, 2016 | Israeli shoulder implant medical device company OrthoSpace has raised $7 million in a financing round from new investor Johnson & Johnson Innovation and previous investors HealthpointCapital, Smith & Nephew and TriVentures. Led by Itay Barnea, CEO, Caesarea-based OrthoSpace produces InSpace, an orthopedic biodegradable balloon system that is a minimally invasive method for rotator cuff repair. The product, marketed in Europe, Israel, Russia and Hong Kong where 10,000 balloons have been implanted, is for patients who suffer from a rotator cuff injury, and reduces shoulder pain and improves the range of motion.

Tel Aviv U. Student Film Wins Latin American Festival

| December 5, 2016 | Hadas Ben Aroya’s senior film, ‘People That Are Not Me’, created as part of her studies at the Tisch School of Film at Tel Aviv University, has won first prize at the prestigious Mar del Plata film festival, the most important festival in Latin America. The film deals with the lives of twentysomething residents of Tel Aviv, and was produced, written and starred in by the director herself. The film was produced on a low budget, and is a rarity in the film world, winning awards as a feature film despite being produced as part of an undergraduate degree.

Three Hebrew U. Researchers Awarded EMET Prize

| December 4, 2016 | Three researchers from the Hebrew University of Jerusalem will be awarded prizes in three of the five award categories of the prestigious EMET Prize, accounting for three of the eight total prizes awarded in 2016. The awarding of the prizes will take place this evening at the Jerusalem Theater with the participation of the Prime Minister of Israel. The Hebrew University winners are: Professor Yehuda Bauer in Humanities (Holocaust Research) for his multifaceted research that raised public awareness of the Holocaust and influenced the study of the Holocaust and the public discourse in Israel and worldwide on antisemitism, the Holocaust and genocide; Professor David Kazhdan, winner in Exact Sciences (Mathematics) for major contributions in the design of representation theory and its uses in algebra, algebraic geometry and number theory; and Professor Haim Sompolinsky, winner in Life Sciences (Brain Research) for establishing the theoretical framework for understanding the principles of brain function and the behavior of neuronal networks, and for shaping brain theories into a systematic discipline using methods borrowed from statistical mechanics.

Israel’s SintecMedia Buys Operative Media For $200M

| December 1, 2016 | Israeli TV advertising management technology company SinTecMedia is acquiring the US digital advertising solutions company Operative Media Inc. for $200 million. The merged company will offer a range of tools that will help companies save costs by streamlining TV and digital advertising expenses. Jerusalem based SinTecMedia was acquired in April by US private equity fund Francisco Partners for $400 million from Riverwood Capital, another US private equity fund. Founded 16 years ago, SinTecMedia took a big step forward in early 2014, when it acquired Pilat Media Global, a competitor listed on the UK AIM stock exchange in which it already had a 22.7% stake. SintecMedia paid $103 million for the rest of Pilat Media, a company whose business was identical to its own.

F2 Capital Opens, Launches $50M Fund To Back Israeli Startups

| December 1, 2016 | Three members of the senior investing team at major Israeli venture firm Genesis Partners, Eddy Shalev, Jonathan “Jonny” Saacks and Barak Rabinowitz, announced today the the creation of their own early-stage fund, F2 Capital. F2 Capital is in the midst of closing a $50 million debut fund to back seed stage companies. The newly spun out firm is taking over the management of The Junction, an accelerator program that was started by Genesis Partners. Founded in 2011, the Junction is modeled after the Israeli military selection process for elite units with some 250 applicants pitching and only five companies selected to enter the six month bootcamp program. F2 provides $100,000 of funding on a convertible note to those top five selected companies. The firm maintains an option to invest more in their later rounds. Previous participants in the Junction have included: Appsflyer, Honeybook, Simplee, ClarityRay (acquired by Yahoo!), KitLocate (acquired by Yandex) and Moment.me (acquired by Wix). F2 will focus on “frontier” technology, tech that’s beginning to transform existing industries or create new industries.

Intel Joins Delphi, Mobileye To Make Driverless Car

November 30, 2016 | Giant chip maker Intel has joined Delphi Automotive and Israeli company Mobileye on their quest to manufacture a driverless car by 2019. The companies will present at CES 2017, to be held in Las Vegas in January. With Mobileye contributing its cutting-edge autonomous driving technologies, and Intel (which employs some 10,000 people in Israel) contributing the tremendous computing power needed for the future car, there’s no doubt Israel is playing a significant role in the emerging self-driving car industry. Mobileye is already collaborating with BMW and Intel on an autonomous car. Mobileye, which develops vision-based driver assistance systems that help prevent collisions, was founded in 1999 by Prof. Amnon Shashua and Ziv Aviram.

AT&T’s New TV App Developed In Israel

| November 29, 2016 | Yesterday, US telecommunications conglomerate AT&T launched a new TV project, in which content is streamed to the web via an application. The application was mainly developed by AT&T’s Israel R&D center. The R&D center had started out as Israeli company Interwise, acquired by AT&T in October 2007. It has over 500 employees and is managed by the center’s CEO Nir Shalom. Other than video content, the new service offers more than 120 TV channels: sports channels, content channels, live performances and more. The company said that DirectTV Now will be offered on all devices, independently of AT&T’s mobile phone services. The app is available on both Apple and Android devices, but is not currently available outside the US.

Spinal Implant Co. ApiFix Raises $5M

| November 29, 2016 | Israeli spinal implant company ApiFix has raised a $5 million Series B investment round, which will be closed by the end of next month. ApiFix is developing a minimally invasive deformity correction system for patients with Adolescent Idiopathic Scoliosis (AIS). Based in Misgav in northern Israel, ApiFix is part of the Trendlines Group. B. Braun Melsungen Aesculap division has invested $2.8 million in the latest financing round.

OurCrowd Opens Singapore Office

| November 28, 2016 | OurCrowd, a global leader in equity crowdfunding, announced today that it has opened an office in Singapore, its seventh worldwide, to serve the growing community of Asian investors interested in funding early stage high-growth companies. It has also appointed Denes Ban, a successful entrepreneur and technology executive, as Managing Partner Asia and head of OurCrowd’s Singapore Management company. The move follows OurCrowd’s announcement earlier this year that it has partnered with United Overseas Bank (UOB) and Sassoon Investment Corporation (SassCorp) to pursue equity crowdfunding for startups and SMEs in the region. OurCrowd also received a formal license to begin operating in Singapore from the Monetary Authority of Singapore in August 2016.

Technion Opens New Cancer Research Center

| November 24, 2016 | Scientists and researchers from around the world gathered this week in Israel for the inauguration of the Technion Integrated Cancer Center (TICC), a first-of-its kind hub for global cancer research, which will expedite the discovery of new diagnostic tools and treatments through a collaborative “bench-to-bedside”approach. In addition to serving as a hub for multiple fields of research, the TICC will also be a nexus for the Technion’s five affiliated hospitals that run clinical trials. It will be co-led by Professor Ze’ev Ronai and Distinguished Professor Aaron Ciechanover – who along with Technion Professor Avram Hershko and the late Dr. Irwin Rose won the 2004 Nobel Prize for the discovery of the ubiquitin system, a discovery which led to the development of efficient anti-cancer drugs, e.g. Velcade® for Multiple Myeloma.

Fintech Company PayKey Raises $6M

| November 24, 2016 | Israeli fintech company PayKey has completed a $6 million financing round. The company has developed a system enabling banks to provide peer-to-peer fund transfer services via social networks and instant messaging applications. PayKey was founded in 2014 by CEO Daniel Peled and CTO Offer Markovich. It has so far raised $6.4 million and has 20 employees.

SDK Management Co. SafeDK Raises $3.5M

| November 23, 2016 | Israeli SDK management company SafeDK has closed a Series A financing round of $3.5 million led by StageOne Ventures with the participation of Samsung Next Tel Aviv, Marius Nacht, Kaedan Capital, and angel investor Leon Waisbein. This funding round follows a seed investment of $2.25 million in November 2015. SafeDK is an SDK management and marketplace for enterprises and mobile developers. It offers an infrastructure solution, which improves mobile apps’ security, stability, and QoS by monitoring and controlling 3rd party tools integrated in the apps. The company was founded in 2014 by two women – CEO Orly Shoavi and VP Business Development Ronnie Sternberg.

Hebrew U. Grads World’s 67th Most Employable

| November 22, 2016 | An analysis of graduates’ employability published by Times Higher Education (THE) ranked graduates of the Hebrew University of Jerusalem as the 67th most employable in the world, the highest among all Israeli institutions. The rankings, which reveal which universities recruiters at top companies think are the best at preparing students for the workplace, also included the Technion-Israel Institute of Technology in 122nd place, and Tel Aviv University in 139th place. The top 3 ranked institutions globally were California Institute of Technology, Massachusetts Institute of Technology and Harvard University.

Three Israeli Startups Raise A Total Of $37M

November 17, 2016 | Three Israeli companies, Logz.io, SeaLights, and Siemplify, announced major funding rounds this week, raising an aggregate total of $37 million. Logz.io, which combines machine learning with human insights so businesses can better understand and monitor their networks, raised $16 million, bringing the capital raised since its founding in late 2014 to $24 million. SeaLights announced it has raised $11 million. The company has developed a cloud platform, allegedly the first of its kind, for continuous quality assurance (QA) tests. Cyber security company Siemplify completed two financing rounds within nine months, raising $4 million in the first last February and $10 million in the current round.

AI Diagnostic Co. Kang Health Raises $3.3M

November 17, 2016 | Israeli startup Kang Health has raised a $3.3 million seed round from Bessemer Venture Partners, Comcast Ventures, Mangrove Capital, Lerer Hippeau Ventures, Primary Ventures, and Taboola CEO Adam Singolda who is joining their board. The new company is headed by former Vroom and Wix CEO Allon Bloch. Their software takes an AI approach to diagnosing symptoms, that will at both facilitate a conversation with a user about his or her symptoms while simultaneously drawing crowd-sourced data from others who reported similar symptoms. From there, Kang’s platform would draw diagnostic and treatment suggestions.

Event Targeter EverThere Raises $1.8M

November 17, 2016 | EverThere, a San Francisco and Tel Aviv based company that helps advertisers precisely target event attendees, has raised $1.8 million in a round led by Elevator Fund. The company boasts a 21% conversion rate through personalized advertising campaigns at events and trade shows. The funding will be mainly used to grow its event marketing automation platform and its West Coast sales and marketing team. EverThere’s platform enables advertisers to connect with event audiences who are actively seeking solutions, then engages their addressable target market with unique offerings, even when do not attend or sponsors those events.

Lice Treatment Startup ParaSonic Raises $1.6M

November 17, 2016 | Israeli startup ParaSonic, which developed a comb-like device that destroys head lice using ultrasound waves, has raised $1.6 million from a private American investor, the company said yesterday. ParaSonic is an early-stage startup led by David Tavor and backed by Arab-Israeli technology incubator NGT3, which is located in Nazareth.

Mort Zuckerman Awarded Technion Medal

| November 15, 2016 | Mortimer B. Zuckerman was presented with The Technion Medal, the highest honor of the Technion-Israel Institute of Technology at a festive dinner last night in New York City. A business leader and philanthropist, Zuckerman was honored for establishing the Zuckerman STEM Leadership Program—a transformative initiative designed to foster collaboration between scientists in the U.S. and Israel. “The idea is to have Israelis study at the highest level of technology and science in America and vice versa, for Americans in Israel,” Zuckerman said in a statement. “Collaboration and cooperation are crucial in today’s fast-paced world of science. This is a win-win for both countries,” Technion President Professor Peretz said in a statement.

Playtech Buys Finance Co. CFH For $120M

| November 14, 2016 | Gaming software development company Playtech has agreed to buy Consolidated Financial Holdings for up to $120 million– a deal it said will enhance its position as it continues to build a B2B offering in its financials division. Playtech is controlled by self-made Israeli billionaire Teddy Sagi and the acquisition will be made in two stages, as is customary with Playtech. CFH Clearing was founded in 2008 and is part of CFH – an investment group founded by two leading UK private equity funds. CFH Clearing has about 100 employees, including a 70-person IT staff.

US Energy Dept. To Invest In Israeli Clean Energy

November 13, 2016 | The U.S. Department of Energy (DOE) and Israel’s Ministry of National Infrastructure, Energy and Water Resources (MIEW), along with the Israel Innovation Authority, announced the investment of $4 million in five newly selected clean energy projects as part of the Binational Industrial Research and Development (BIRD) Energy program. The total value of the approved projects is $8.6 million in the areas of solar energy, biomass, fuel cells and energy efficiency. The selected startups are: BrightSource, CelDezyner, Solview Systems, Technion IIT, and Waves Audio.